May 18, 2024 - Business

Elon's AI venture being sold as part of a "Muskonomy"

Photo illustration of Elon Musk and the Twitter logo on square abstract blocks.

Photo illustration: Aïda Amer/Axios. Photo: Jonathan Newton/The Washington Post via Getty Images

Investing in Elon Musk's xAI is an opportunity to get involved in "the Muskonomy" of ventures fronted by one of the world's wealthiest men.

Why it matters: xAI is said to be raising as much as $6 billion to catch up to rivals like OpenAI and Anthropic, and it needs a compelling story for investors.

The big picture: xAI's close relationship with X — formerly known as Twitter — is key to its potential success and one aspect of the "Muskonomy," according to the deck prepared by Brookfield late last year and seen by Axios.

  • "The fuel for AI is data," notes one slide. "X represents the world's most timely dataset of real-time human conversations, interests, and trends for xAI to form its intelligence. X's dataset will also become valuable as it progresses on its 'everything app' vision."
  • In addition to the sheer size of data the AI company can access from X, the deck points out that as users continue to generate new posts, xAI will have a constant feed of new data to improve its model.
  • The deck also highlights how xAI will be able to tap into video data from automaker Tesla and have "strong alignment to human safety" by partnering with Neuralink, Musk's brain chip startup.
  • Brookfield declined to comment to Axios, and X did not immediately respond to a request.

Between the lines: It's not yet clear what other social media data xAI plans to use to feed its models, but having baked-in access to one major network is significant.

  • Most of its competitors have resigned themselves to signing licensing deals with social media companies to use their data — just this week, OpenAI signed one with Reddit, for example.

Thought bubble: The deck is a long and detailed way of making an argument Musk's supporters have long bought into: The billionaire will turn anything into a success, so best to buy a seat early before the rocket ship takes off.

The intrigue: A number of blue chip investors will surely back xAI, but a number of smaller backers also seem to be piling into the company, likely via special purpose vehicles, according to various SEC documents.

  • Axios reached out to a few investors named in those filings, but none replied to confirm involvement.

The bottom line: In the AI wars, everyone is looking for a moat — and xAI's might be Musk.

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